The Securities and Exchange Commission is reportedly investigating how Eastman Kodak received a a $765 million loan from the US government to help make drug ingredients, according to the Wall Street Journal.
Last week’s surprise announcement sent Kodak’s shares soaring — as much as 2,757% — and sparked heavy trading volume for the largely forgotten company. Questions also arose about executives, including Jim Continenza, Kodak’s executive chairman and CEO, receiving stock options on July 27, a day before the loan announcement.
Regulators are reportedly investigating why Kodak announced the loan on the day prior to the official announcement, which sent shares 25% higher. The Journal said a local TV station in Kodak’s home of Rochester, NY, published a media advisory of the upcoming announcement.
Kodak, in a statement to CNN Business, said it didn’t intend to make those details public until July 28. However, the Journal reported Kodak didn’t give the TV station an embargo on the announcement.
The Journal noted the investigation is at an “early stage and might not produce allegations of wrongdoing by the company or any individuals.” The SEC did not immediately respond to a request for comment.
Kodak’s unusual deal with the government and the wild stock moves that followed caught Senator Elizabeth Warren’s attention.
“There were several instances of unusual trading activity prior to the announcement, raising questions about whether one or more individuals may have engaged in insider trading or in the unauthorized disclosure of material, nonpublic information regarding the forthcoming $765 million loan awarded under the Defense Production Act,” she wrote in an open letter to the SEC Tuesday.
Kodak claims that the timing of the options was coincidental, taking place on the day of the board’s compensation committee meeting — July 27.
“Mr. Continenza has purchased shares at nearly every available window in which he is eligible since he joined the company,” Kodak said. “He has not sold a single share of stock during his time at Kodak.”
In response to Warren’s letter, Kodak said it intends to “fully cooperate with any potential inquiries.”